Page 131 - SMUGGLING IN INDIA REPORT FOR 2020-2021

CHAPTER 6: FOREIGN TRADE POLICY: MISUSE OF SCHEMES 85
Misuse of Advance Authorization Scheme
In one such case booked by DRI, the importer made import of PVC resin items by ingeniously exploiting loopholes in the procedure for grant of advance authorizations by DGFT as well as their registration and utilization at Customs formations.
Imported PVC resin and polypropylene are in huge demand in the domestic market and the price differential, purely due to evasion of customs duties, provides a huge quantum of profit to the tax evaders. This eventually results in pushing genuine importers, who pay the applicable customs duties diligently, out of business. The availability of such cheap imports also adversely impacts the ‘Make in India ‘and ‘Aatmanirbhar Bharat’, the flagship programmes of the Government of India, as the local PVC manufacturers suffer a price disadvantage.
Advance authorization frauds involving 1,87,401 MT of various plastic polymers valued at Rs. 1,203 crores with duty evasion of Rs. 434 Crore have been booked by DRI and Customs, which indicates that these goods are favourite items of the fraudsters for misuse of Advance Authorization Scheme. There is an urgent need to re-evaluate the Advance Authorization Scheme for certain evasion prone goods.
Additionally, it is observed that these customs frauds are interwoven with GST frauds. The imported duty-free goods are generally sold in the domestic market by the firms controlled by the mastermind. Thus, these masterminds doing customs duty evasion invariably undertake GST frauds by utilizing fraudulent input tax credit and thereby compounding the adverse impact of fraud.
Misuse of FTAs
From 2004 to 2011, India has signed 11 Preferential and Free Trade Agreements (PTAs / FTAs). In 2020, in a landmark decision taken by the Government, India
opted out of joining the mega- FTA, Regional Comprehensive Economic Partnership (RCEP), on the grounds that India’s core concerns were not addressed.